GROUPON
We’ve been wondering about the fate of the coupon industry for the last couple of months.
After the success of Groupon, a lot of local retailers have launched similar product offers. AnnArbor.com has the “real deal”, ValPak recently launched a daily deal, and even some of the local media sites like CBS Detroit are getting involved. Then there’s DealGator, a similar deal engine like Groupon that searches all deal sites, and filters them based on your location and the kind of deals you want.
Since all of these local media guys have existing relationships with the businesses in the market, what does this mean for relevance of Groupon?
Last week Matt Zumstein, our Director of Digital Media, noticed that both Groupon and CBS Detroit were offering the same exact deal for $10 worth of ice cream for $5.
This raises the question if multiple coupon companies can survive in today’s market with the same product offering?
This remains to be seen as Groupon competitors continue to pop up. Though Groupon still remains the leader of this space, the above pricing example leads one to wonder if Groupon will regret rejecting Google’s multi-billion offer. Another interesting insight is that businesses that sign up for these deals give away 35–45% of their profit to the site. Depending on the industry clients usually spend 5–10% of their profits on marketing or advertising.
If a competitor offered more favorable margins to a retailor, what’s to keep them from leaving Groupon? Would smaller niche businesses want to give up that large of a percentage? Could they even entertain that option?
This could be an advantage for local online deal-of-the-day competitors like Ann Arbor’s The Real Deal — focusing on the community aspect while offering niche retailers the opportunity to reach a larger audience.
It is probably still too early to tell. The digital coupon space could be the new retailer battleground, and it will be interesting to see how this space unfolds.
